Sydney fintech startup Waddle is expanding into New Zealand due to strong interest for its cloud-based funding software technology amongst SMEs from the neighbouring nation, its co-founders explained.

Founded in 2014 by high-school friends Simon Creighton, Leigh Dunsford and Nathan Andrews, the SME lender integrates with accounting software platforms and provides businesses with a real-time view of available funding, with an automatic drawdown of funds against unpaid invoices.

Creighton and Dunsford spoke to Dynamic Business about the problem they are solving and the value the expansion into New Zealand will generate for not only the company but SMEs.

DB: What motivated the three of you to found Waddle?

Dunsford: We saw an opportunity to create a more efficient and effective way of funding businesses by automating every aspect of lending and borrowing. No-one was building software to solve what has been, for decades, a very manual and labor-intensive. Essentially, the team wanted to automate and simplify the process. Pooling our knowledge of factoring/lending (me), systems (Simon) and tech development (Nathan), we bootstrapped the business.

DB: What is the unique selling point for Waddle?

Dunsford: Waddle’s data feeds automate most of the book work, which means SMEs and their clients spend less time dealing with finance companies and more time growing.

Every financial data interaction that a business owner has lives inside their accounting software. Now and in the future, accessing working capital should simply be an extension of this trusted data. Seeking working capital through Waddle is a plug and play experience, removed from any traditional application or credit processes that loan seekers encounter with offline players.

The second USP, and possibly the most significant, is the transformation of the traditional invoice financing product into a simplistic line of credit. Today, traditional invoice finance providers are still doing it the same way it’s been done for decades. The same pricing models, software, contracts and manual processes are still evident in even the newest platform starting up.

Waddle invested significant resources into understanding what SMEs preferred and stripped down every complexity previously associated with this type of product. This has resulted in a unique offering in the marketplace.

DB: What successes paved the way for the NZ expansion?

Creighton: We’ve experienced 400% client growth since June 2016, funded over $200m in receivables in the last 12 months and have a client base that includes the official distributor and producer of sunscreen for Surf Life Saving Australia, Sunlife Products Pty Ltd, along with Black Lab Design, Cartel & Co, Ecoplant Australia and Essential Personnel Services.

DB: What growth opportunity does NZ represent for Waddle?

Creighton: Waddle has received strong inbound interest from New Zealand SMEs over the last 12 months, from industries spanning recruitment, wholesalers, exporters and service providers. As we have approved a number of NZ accounts, it is important for us to establish a presence on the ground as soon as possible. As such, we’re planning to establish software development personnel in New Zealand to facilitate strategic integrations with partners we are in talks with. This will also allow us to better service ongoing demand.

According to a 2016 report by the New Zealand Government, the total number of small businesses in NZ is 487,602, representing 97% of all businesses in NZ. The country’s SMEs have one of the world’s highest cloud accounting adoption rates. Reported by Xero in March 2017, there are 246,000 SMEs using their solution in NZ, with MYOB holding the majority of the remaining market. New Zealand will serve as a launching pad for further expansion plans.

DB: How different is the NZ funding landscape to Australia’s?

Dunsford: When it comes to traditional working capital products, New Zealand and Australia are similar. The primary working capital product offered in both counties are traditional bank overdrafts, which are almost always secured by property assets. These facilities are limited to the equity in property asset, often taking weeks to months to arrange.

What’s evident is the level of maturity in accessing alternative sources of capital in Australia versus New Zealand. Australia is at least five years ahead, with a greater pool of lenders offering products to SMEs, where banks are failing to service. We’ve seen some unsecured lenders opening up shop in New Zealand, which service micro SMEs; however, we saw the opportunity in high growth industries such as wholesalers, exporters and recruitment to offer scalable funding facilities that can deliver capital right through their growth cycle without relying on fixed traditional assets.

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